Former managing director of web hosts Rackspace and customer service evangelist Dominic Monkhouse tells Growing Business about his ‘simple’ strategy to take on his old company
There’s a lot to play for in the web hosting space. Market leader Rackspace is a clear frontrunner, but after that, the market is surprisingly fragmented, according to Dominic Monkhouse, managing director of hosting firm PEER 1.
Across the pond, the Canada-based company is a multimillion-dollar operation, and a serious contender to Rackspace. Over here, it’s a different story, but after launching its UK operations in April, Monkhouse is hell-bent on achieving similar success.
This is certainly a highly ambitious aim, but it’s not beyond the realms of possibility. After all, Monkhouse played a considerable role in helping Rackspace achieve its market-leading position in the first place. When he joined the firm in 2001, it had four employees and barely any revenue. When he left in 2006, it had 150 staff and was turning over more than £20m.
The company also had the Management Today Service Excellence Award under its belt, as well as recognition from The Financial Times and The Sunday Times as a great place to work.
PEER 1 has already started as it means to go on, and Monkhouse tells Growing Business about his service-led battle plan.
Take it on the chin
For a self-styled customer-service evangelist, Monkhouse certainly takes a lot of opportunities to spread the gospel. He has delivered speeches on the subject, and is now an assessor for the The Sunday Times Customer Experience Awards.
“I just think it’s dead easy, and I don’t understand how people make it so complicated,” he says.
What many don’t understand is that every instance of human interaction is a moment of truth for a business. It was a lesson Monkhouse first learned in his second job as assistant manager at Marks & Spencer.
“It wasn’t uncommon for men to come in and buy a suit on a Friday, cut all the tags off, wear it to a wedding and then bring it back on Monday claiming it didn’t fit,” Monkhouse says, recalling one incident where the item was so creased it couldn’t be resold. Much to his surprise, his manager agreed to take it back, insisting that it was all part of owning and building the store’s reputation.
Monkhouse is fostering a similar culture, and believes it’s futile to get into a war over who’s to blame. “We’re in the IT game,” he says. “Things do go wrong and customers break their own stuff all the time. Then, if they ring us and say: ‘It’s broken,’ we’ll assume responsibility. In fact, we’ll say it’s our fault, so we’ll also take accountability, because without owning the problem, we can’t fix it. We won’t say: ‘Actually, we’ve looked in the log file and we think you logged in and broke it.’”
In other words, sometimes you need to take one on the chin and think about the long-term benefit, rather than succumbing to your gut instinct and becoming defensive. That said, Monkhouse concedes there is a line. He doesn’t think the customer is always right and he won’t tolerate abuse. “If anyone is abusive to any of our staff, it doesn’t matter who they are, we’ll terminate the account,” he says.
Exorcising staff of the bad habits they’ve picked up from previous employers is one of the hardest things to do, according to Monkhouse. He frequently encounters those who have been programmed to deny responsibility. Not only does this set the wrong precedent, it also results in a disillusioned team. “If you expect your staff to lie to customers, you’ve lost all moral high ground,” he says. “They start not giving a shit.”
Owning up to mistakes might seem counterintuitive, but honesty will get you a long way. If there has been a service failure at PEER 1, the staff will pick up the phone and tell the customers what happened. “They’ll say: ‘Look, we cocked up. I’m terribly sorry,’” explains Monkhouse. “Then they’ll tell the customer what we’ve done to make sure it never happens again, and offer them a token.”
In the hosting game, this kind of response is especially important. Whatever PEER 1 charges its clients, Monkhouse estimates that those customers drive 10 to 100 times that in revenue. Even if they give a customer a month’s free hosting, it may still be insignificant compared to the revenue the customer could have lost through downtime, or reputational damage.
So, on the rare occasions that major cock-ups occur, Monkhouse will personally call clients as soon as possible, and ask what he can do to make them happy and regain their trust. Often, just demonstrating this level of diligence is enough. “I’ve never had a customer say: ‘Right, we’re off,’ as a result,” he says. “I’ve always ended up building more trust, getting more referrals and holding on to their business.”
All fired up
Great customer service depends on motivated staff, but what you really should be encouraging is self-motivation. This means giving staff ownership over their roles and trusting them to do their jobs. For example, at PEER 1, customer credits are pre-authorised up to a certain level, so employees can use their discretion and customer issues can be resolved swiftly. Or, as Monkhouse puts it, if they are presented with an opportunity to create some “customer wow”, they know what to do.
This is supported by a culture of learning and review. Every week, Monkhouse meets with the customer-facing staff to look over any credits that have been issued or complaints received. Sometimes, he’ll also listen to their calls with customers and give them pointers, but they are by no means micro-managed. “They become self-reliant, because they own their roles,” he explains. “Then they begin helping each other, and start to care.”
Monkhouse also takes every opportunity to catch staff doing the right thing and celebrates this, helping others to learn. Positive comments from customers are passed on to the whole team to spur them on. At the same time, they have ‘cock-up of the month’, the recipient of which wins a bottle of champagne. “It’s not that we’re trying to reward failure, but rather that we want to create a culture of honesty,” Monkhouse explains. “We try to get these things out in the open, so that people can learn from them.”
How was it for you?
For a service business, being available to your customers when they have a problem is vital to winning and retaining them. At PEER 1, a live chat facility is helping to increase the conversion rate of web visitors to prospects by 300%.
Monkhouse also takes every opportunity to gather feedback from customers, whether through ad hoc emails and phone calls, when they close a support ticket or through regular surveys, which ask for ways PEER 1 could improve. Meanwhile, processes are regularly reviewed, to ensure customers aren’t suffering “death by a thousand paper cuts”.
Feedback helps determine what percentage of customers are “evangelical”, which Monkhouse states is around 3% on average. “Over a 10-year period, they’re probably responsible for almost all of the profit that the average business generates,” he says. “Yet most companies don’t know who their own evangelists are, let alone have a stated aim to get more word-of-mouth referrals than their competitors.”
Essentially, there are lots of things you can do to raise service levels in your business, but Monkhouse insists that the premise is surprisingly straightforward. “We start with hiring great people, then we provide them with a great company to work for, and a great culture that they have a big say in forming,” he says. “Unless you do all that, I just can’t see how you end up with great customer service.”
Ultimately, you need the desire to make it happen. “Unless the people who are running the company really want it,” says Monkhouse, “then you might as well just be satisfied with being average.”